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IDB Invest, a member of the IDB Group, has provided financing for US$200 million to Banco Sofisa S.A. (Sofisa) in Brazil, together with Proparco and FinDev Canada. The proceeds will contribute to increasing access to finance in Brazil by supporting the expansion of Sofisa’s SME portfolio.

The project will increase the availability of stable, long-term financing to Sofisa to support the growth of their SME lending, while contributing to improve the maturity and structure of its debt profile. SMEs are of great importance to Brazil’s economy, with over 300 thousand SMEs providing 39% of the country’s total jobs in 2020, but they face a severe financing gap, even more so if they are owned by women. A portion of the Proparco and Findev Canada financing will be dedicated to lending to Women-Owned SMEs.

This deal can potentially contribute to three United Nations Sustainable Development Goals (SDGs): Decent work and economic growth (SDG 8), Industry, innovation, and infrastructure (SDG 9) and Partnerships for the goals (SDG 17).

IDB Invest provided US$50 million and mobilized US$25 million from the China Fund for Latin America and the Caribbean, US$30 million from Proparco, and US$20 million from FinDev Canada, collectively the Co-lenders. In addition, US$75 million was mobilized through B loan participants. The financing is structured as a 4-year final maturity for the loans from the Co-lenders, and a 2-year final maturity from the B loan participants.

IDB Invest, through its Advisory Services, Proparco and FinDev Canada will provide support to Banco Sofisa S.A. in developing a sustainable finance strategy for fostering effective adoption of financial solutions for the SMEs (social and sustainable SMEs) segment and building internal capacities for increasing women-led/owned SMEs in the portfolio. To this end, IDB Invest, Proparco and FinDev Canada will provide Sofisa with technical support to improve its portfolio segmentation, determine improvements needed to better target the social and sustainable SMEs and SMEs led/owned by women, define social and sustainable SMEs eligibility criteria, and enhance its sustainable finance and gender lens investing strategies. The 3 co-lenders strongly contributed to the design of gender-oriented components and aim to join forces with Sofisa to strengthen the scope of this service.

The transaction will also qualify for the 2X Challenge, based on Sofisa’s commitment to support and finance WSMEs, as well as their own percentage of women in employment and in leadership.

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